1902

LAKE,

In re. CAVENDISH, Ex parte.

as trustee for the benefit of other clients of the firm who had been defrauded, but did not disclose to Cox the existence of the mortgage of the previous 6th of April. In June, 1900, Cox gave notice of his mortgage to the insurance offices, and shortly afterwards B. G. Lake became bankrupt. On December 5, 1900, the mortgage of April 6, 1899, was found at B. G. Lake's office, and notice of it was at once given on behalf of F. Cavendish to the insurance offices.

F. Cavendish now claimed a declaration that his mortgage was entitled to priority over Cox's mortgage.

H. Reed, K.C., and J. Johnson, for F. Cavendish. This is a case of two equitable incumbrances on the equities of redemption of certain policies created by the same grantor. In the first place, Lake held the money as solicitor for Cavendish with instructions to invest, and therefore stood in a fiduciary position towards him, and under the circumstances constituted himself by the mortgage of April 6, 1899, a trustee of the property for Cavendish, and could not by his subsequent mortgage to Cox give the parties claiming under that mortgage a title paramount to that of his cestui que trust, Cavendish. The case is covered by the dictum of Jessel M.R. on the second point raised in Mumford v. Stohwasser. (1) The decision on the main issue in that case has been overruled in Hunt v. Luck (2), but leaves the dictum now relied on unaffected. Secondly, the doctrine of priority by notice rests on laches or diligence—the most diligent gets priority: Dearle v. Hall (3); Loveridge v. Cooper. (4) Here, the question of laches or diligence does not arise, for it was impossible for Cavendish to give notice until December 6, 1900. In all the cases there has been some omission, neglect, or laches which has deprived the party of his rights. Unless the doctrine of priority by notice, apart from laches or diligence, is a hard and fast rule, it should not be applied to a case like this. R. B. Acland, for Cox. As to the first point, the dictum of Jessel M.R. does not apply. Lake was not a trustee for

(1) (1874) L. R. 18 Eq. 556, at p. 562.
(2) [1902] 1 Ch. 428.

(3) (1828) 3 Russ. 1; 27 R. R. 1.
(4) (1828) 3 Russ. 30; 27 R. R. 1.

Cavendish. As to the second point, the principles of priority
do not rest only on laches or diligence, but on notice: Foster
. Cockerell. (1) Cox was undoubtedly the first to give notice
without any knowledge of the prior charge, and is therefore
entitled to priority.

Northcote, for the trustee in bankruptcy.
Reed, K.C., in reply.

Cur, adv. vult.

Dec. 15. WRIGHT J., after stating the facts, continued:The question is, Which of two equitable incumbrancers is entitled to priority? The ordinary rule in cases of equitable assignment is that that one obtains priority who is the first to give notice. Now, here it was contended that Lake was a trustee for Cavendish, and a dictum of Jessel M.R. in Mumford v. Stohwasser (2) was relied upon. But it seems to me that the dictum does not apply, because the facts of this case do not raise the same question. Then it was said that the doctrine of priority by notice depends on laches, and that Cavendish had not been guilty of any negligence because he had given notice directly he knew of his mortgage. But I think the point is disposed of by the judgment of Lord Lyndhurst in Foster v. Cockerell. (3) He says: "This was a question of priority between two equitable incumbrancers-a question whether the subsequent incumbrancer of the equity, having given notice to the trustees of the fund, was entitled to priority over the former incumbrancer. Now, that question has been settled, after much deliberate discussion, in the cases of Dearle v. Hall (4) and Loveridge v. Cooper. (5) Those two cases were argued before Sir Thomas Plumer as Master of the Rolls with great learning and attention to the subject. The Master of the Rolls, after considering the question, pronounced a very elaborate judgment, deciding that in cases of this description the party who gave notice to the trustees was entitled to the priority; and, without adverting to the particular facts of those

(1) (1835) 9 Bli. (N.S.) 332; 39 R. R. 24.

(2) L. R. 18 Eq. 562.

VOL. I. 1903.

(3) 9 Bli. (N.S.) 332, at p. 375.

(4) 3 Russ. 1; 27 R. R. 1.

(5) 3 Russ. 30; 27 R. R. 1.

M

2

1902
LAKE,
In re.
CAVENDISH,
Ex parte.

1902

LAKE,

In re. CAVENDISH, Ex parte.

Wright J.

In

cases, the principle upon which the decision was founded was
this, that if a contrary doctrine were to prevail, it would enable
a cestui que trust to commit a fraud; he might assign his
interest first to one and then to a second incumbrancer, and
that second incumbrancer would have no opportunity by any
communication with the trustees of ascertaining whether or
not there had been a prior assignment of the interest. There
was also another principle upon which he decided that case,
which was this, that a party till he gives notice to the trustees
has not done everything necessary to complete his title.
such cases it is necessary for the parties to do everything in
their power. Further than that he assigns, as an additional
reason, that until notice was given to the trustees, they did not
in fact become trustees for the assignee. It was upon these
distinct grounds that he laid down as a general rule, that in
case of an equitable assignment, the party giving notice to
the trustees, although he was the second incumbrancer, was
entitled to priority, if the former incumbrancer had given no
such notice. . . . The principle of those authorities applies
directly to the present case." According to that authority, the
rule which prefers that assignee who has given the prior notice
does not depend solely on the imputation of laches to those
who have not given notice; and even in the absence of laches
the other grounds for the rule exist. Nor, I think, has the
question ever been treated as one merely of laches. The
Courts seem to me to have in modern times asked only which
assignee was the first to perfect his security by notice. I
hold therefore, even although this is an extreme case, that
Mr. Cavendish is not entitled to priority over the second
mortgagee.

Solicitors for Mr. Cavendish: Bompas, Bischoff & Co.
Solicitors for Mr. Cox: Longbourne, Stevens & Co.
Solicitors for trustee in bankruptcy: Leigh & Pemberton.

H. L. F.

[IN THE COURT OF APPEAL.]

CLARKE AND WIFE v. ARMY AND NAVY
CO-OPERATIVE SOCIETY, LIMITED.

Negligence-Sale of Goods-Dangerous Goods-Knowledge of Vendor-Duty
of Vendor to Purchaser-Warranty of Fitness-Sale of Goods Act, 1893
(56 & 57 Vict. c. 71), s. 14.

Where the vendor of a tin containing disinfectant powder knew that it was likely to cause danger to a person opening it, unless special care was taken, and the danger was not such as presumably would be known to or appreciable by the purchaser, unless warned of it :

Held, that, independently of any warranty, there was cast upon the vendor a duty to warn the purchaser of the danger.

Where one of the rules of a co-operative society stated that no warranties were given with goods sold by the society, except on the written authority of one of the managing directors or the assistant manager :

Query, whether the rule had the effect of excluding the implied warranty that an article sold for a particular purpose is fit for that purpose.

APPLICATION for judgment or a new trial by the defendants in an action tried before Wills J. and a jury.

The action was brought by a husband and his wife to recover damages in respect of personal injuries occasioned to the female plaintiff through a tin of chlorinated lime sold to her by the defendants, the cause of action being put by the statement of claim alternatively, either as a breach of a warranty that the article sold was fit for the purpose for which it was supplied, or as a breach of a duty arising under the circumstances to warn a purchaser of the explosive or otherwise dangerous character of the article sold.

The facts, so far as material to this report (1), were as follows. The defendants were the owners of co-operative stores, the male plaintiff being one of their ticket-holders. The female plaintiff went to a branch store of the defendants at (1) There was a considerable amount of argument as to matters of fact, and the meaning of the findings of the jury in connection therewith, which had no bearing on the points of law

for which this case is reported. The
statement in the text only gives so
much of the facts, arguments, and
judgments as is material to those
points.

C. A.

1902

Nov. 27.

C. A.

1902 CLARKE

v.

ARMY AND
NAVY

CO-OPERATIVE

SOCIETY.

Plymouth, and asked an assistant in the service of the defendants there to let her have some chloride of lime for disinfecting purposes. The assistant recommended her to have some chlorinated lime, which was sold in the form of a powder in tins. She accordingly bought a tin of chlorinated lime. No warning was given to her of any danger connected with the tin. On the next day she proceeded to open the tin by prising the lid up in the usual way with a spoon, and thereupon what she described as a sort of explosion took place with the result that a portion of the contents of the tin flew up in the air to a considerable height, and was scattered about, and some of the powder got into her eyes, occasioning the injuries in respect of which the action was brought. The rules of the defendant society, which were published in their price-list supplied to ticket-holders, contained a clause which was as follows: "No warranties are given with the goods sold by the society, except on the written authority of one of the managing directors or the assistant manager." It appeared that the tin sold to the female plaintiff had formed one of a small consignment of eighteen similar tins, which had been supplied to the defendants' Plymouth store. Eleven of these tins had been sold, and seven were sent back again to the manufacturer after the accident to the female plaintiff. Three of the tins were sold to a Mrs. Stebbing, to whom, upon her opening one of them, an accident happened similar to that which occurred in the case of the female plaintiff. This was before the sale of the tin to the female plaintiff. One of the tins had been sold to another lady, to whom a similar accident happened in opening it. Four other tins had been sold by the defendants at Plymouth to another lady, in the case of one of which a similar accident occurred. The defendants' manager did not admit that these latter tins had formed part of the same consignment, but it was suggested for the plaintiffs that they had. Upon the accident happening to Mrs. S ebbing her husband at once wrote a letter to the defendants' manager at Plymouth, informing him of the accident, and describing what had happened on the opening of the tin. The defendants' manager thereupon gave instructions to his assistants to the effect that a warning should be given to